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Real estate news in Indonesia

Forecasted growth in Indonesian property prices for Q4/2024, according to Bank Indonesia

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Indonesia’s property market has been facing fluctuating economic conditions lately. However, Bank Indonesia’s latest Residential Property Price Survey (SHPR) has predicted a continued increase in residential property prices in the primary market for the fourth quarter of 2024. The growth rate is expected to moderate compared to the previous quarter, indicating a more stable yet upward trajectory in the property market. Despite the anticipated rise, the overall trend is likely to remain positive.

A recovery in sales while the costs rise

Indonesia’s residential property sales in the primary market witnessed a significant turnaround during the fourth quarter of 2023, featuring a year-on-year increase of 3.27%. This rebound is remarkable because the sector had contracted by 6.59% in the preceding quarter. The Indonesian property market has demonstrated its resilience by attracting buyers despite escalating prices, which is a testament to the country’s enduring demand for residential spaces.

The growth in property prices, as indicated by the Residential Property Price Index (IHPR), grew by 1.74% year-on-year in Q4/2023, a slight dip from Q3/2023’s 1.96%. This subtle deceleration suggests a gradually stabilizing market, offering potential buyers and investors a clearer outlook on future trends.

Development is mainly sourced from the developer’s internal funds

Financing remains a critical component of the property development and acquisition process. According to the SHPR, a significant portion of residential property development financing, approximately 72.82%, is sourced from developers’ internal funds. This reliance on internal financing underscores the strength and independence of developers in the Indonesian market, enabling them to continue projects without heavily depending on external loans.

From the consumer’s standpoint, the KPR housing loan scheme emerges as the predominant financing option, accounting for 75.89% of total home financing disbursement. This preference highlights the accessibility and attractiveness of the KPR scheme for individuals looking to purchase primary homes, facilitating homeownership amidst rising property prices.

As Indonesia’s residential property market prepares for the future, the insights from Bank Indonesia’s SHPR shed light on the evolving dynamics of property prices, sales recovery, and financing trends. For potential property owners and investors, understanding these trends is crucial for making informed decisions in a market poised for growth.

Your guide to buying property in Indonesia

Written by Matt Timmermans

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